Wednesday tips round-up: St.Ives, Workspace, AstraZeneca

3rd Oct 2012 07:03

The Times Tempus column tips St Ives Group, which has moved from the low margin, commoditised world of printing glossy annual reports and magazines. Its print division now produces books and marketing material, such as point of sale displays and posters. This combines well with its second and growing business in marketing services, which helps clients to win and retain customers and analyse data. The marketing services division accounts for only 14% of revenue but that is up threefold on last year. Numis believes it will account for half its revenues in three years. On a PE of 5 it will reward investors who take the time to understand this business.Another tip from Tempus is Workspace Group, which has closed its debut retail bond, raising £57.5m, over the £50m it was aiming for. It says, the company, which provides office space for small businesses in London, having diversified its sources of funding, is a decent punt on the strength of the London economy.AstraZeneca's new chief executive, Pascal Soriot, replaced David Brennan, who departed during the shareholder spring. Mr Brennan's strategy was to boost returns to shareholders via buy-backs and high dividends while the group's scientists innovated to find the next blockbuster drug. However, we are still awaiting the next mega-treatment. The level of cash return under Mr Brennan's tenure is unsustainable unless the pipeline can be replenished. There is no suggestion that the dividend is at risk, as the 6.1% yield really is the major attraction of the shares at the moment, so most analysts concur that the dividend looks safe. AstraZeneca shareholders should continue to hold the shares ahead of the group's strategy update, which is expected alongside its full-year results at the end of January. New investors should await developments, despite the chunky yield. We need to see how Mr Soriot plans to halt the profit decline before taking a view. Trading on a current year earnings multiple of 7.8, which rises to 8 next year because of the expected profit decline, Questor says hold.AB/CMPlease note: Digital Look provides a round-up of news, tips and information that is impacting share prices and the market. Digital Look cannot take any responsibility for information provided by third parties. This is for your general information only as not intended to be relied upon by users in making an investment decision or any other decision. Please obtain a copy of the relevant publication and carry out your own research before considering acting on any of this information.